APER 4
Code of Practice for Approved Persons:
specific
APER 4.1
Statement of Principle 1
- 01/12/2004
APER 4.1.1
See Notes
The Statement of Principle 1 (see APER 2.1.2 P) is in the following terms: "An approved person must act with integrity in carrying out his controlled function."
- 01/12/2001
APER 4.1.2
See Notes
In the opinion of the FSA, conduct of the type described in APER 4.1.3 E, APER 4.1.5 E, APER 4.1.6 E, APER 4.1.8 E, APER 4.1.10 E, APER 4.1.12 E or APER 4.1.13 E does not comply with Statement of Principle 1 (APER 2.1.2 P).
- 01/12/2001
APER 4.1.3
See Notes
- 01/10/2005
APER 4.1.4
See Notes
Behaviour of the type referred to in APER 4.1.3 E includes, but is not limited to, deliberately:
- (1) falsifying documents;
- (2) misleading a client about the risks of an investment;
- (3) misleading a client about the charges or surrender penalties of investment products;
- (4) misleading a client about the likely performance of investment products by providing inappropriate projections of future investment returns;
- (5) misleading a client by informing him that products require only a single payment when that is not the case;
- (6) mismarking the value of investments or trading positions;
- (7) procuring the unjustified alteration of prices on illiquid or off-exchange contracts, or both;
- (8) misleading others within the firm about the credit worthiness of a borrower;
- (9) providing false or inaccurate documentation or information, including details of training, qualifications, past employment record or experience;
- (10) providing false or inaccurate information to the firm (or to the firm's auditors or an actuary appointed by the firm under SUP 4 (Actuaries));
- (11) providing false or inaccurate information to the FSA;
- (12) destroying, or causing the destruction of, documents (including false documentation), or tapes or their contents, relevant to misleading (or attempting to mislead) a client, his firm, or the FSA;
- (13) failing to disclose dealings where disclosure is required by the firm's personal account dealing rules;
- (14) misleading others in the firm about the nature of risks being accepted.
- 01/10/2005
APER 4.1.5
See Notes
Deliberately recommending an investment to a customer, or carrying out a discretionary transaction for a customer where the approved person knows that he is unable to justify its suitability for that customer, falls within APER 4.1.2 E.
- 01/12/2001
APER 4.1.6
See Notes
Deliberately failing to inform, without reasonable cause:
of the fact that their understanding of a material issue is incorrect, despite being aware of their misunderstanding, falls within APER 4.1.2 E.
- 01/10/2005
APER 4.1.7
See Notes
Behaviour of the type referred to in APER 4.1.6 E includes, but is not limited to, deliberately:
- (1) failing to disclose the existence of falsified documents;
- (2) failing to rectify mismarked positions immediately.
- 01/12/2001
APER 4.1.8
See Notes
Deliberately
preparing inaccurate or inappropriate records or returns in connection with a controlled function, falls within APER 4.1.2 E.
- 01/12/2001
APER 4.1.9
See Notes
Behaviour of the type referred to in APER 4.1.8 E includes, but is not limited to, deliberately:
- (1) preparing performance reports for transmission to customers which are inaccurate or inappropriate (for example, by relying on past performance without appropriate warnings);
- (2) preparing inaccurate training records or inaccurate details of qualifications, past employment record or experience;
- (3) preparing inaccurate trading confirmations, contract notes or other records of transactions or holdings of securities for a customer, whether or not the customer is aware of these inaccuracies or has requested such records.
- 01/12/2001
APER 4.1.10
See Notes
Deliberately
misusing the assets or confidential information of a client or
of his firm falls within APER 4.1.2 E.
- 01/12/2001
APER 4.1.11
See Notes
Behaviour of the type referred to in APER 4.1.10 E includes, but is not limited to, deliberately:
- (1) front running client orders;
- (2) carrying out unjustified trading on client accounts to generate a benefit (whether direct or indirect) to the approved person (that is, churning);
- (3) misappropriating a client's assets, including wrongly transferring to personal accounts cash or securities belonging to clients;
- (4) wrongly using one client's funds to settle margin calls or to cover trading losses on another client's account or on firm accounts;
- (5) using a client's funds for purposes other than those for which they were provided;
- (6) retaining a client's funds wrongly;
- (7) pledging the assets of a client as security or margin in circumstances where the firm is not permitted to do so.
- 01/12/2001
APER 4.1.12
See Notes
Deliberately
designing transactions so as
to disguise breaches of requirements and standards of the regulatory
system falls within APER 4.1.2 E.
- 01/12/2001
APER 4.1.13
See Notes
Deliberately
failing to disclose the existence of a conflict of interest in connection
with dealings with a client falls
within APER 4.1.2 E.
- 01/12/2001
APER 4.2
Statement of Principle 2
- 01/12/2004
APER 4.2.1
See Notes
The Statement of Principle 2 (see APER 2.1.2 P) is in the following terms: "An approved person must act with due skill, care and diligence in carrying out his controlled function."
- 01/12/2001
APER 4.2.2
See Notes
In the opinion of the FSA, conduct of the type described in APER 4.2.3 E, APER 4.2.5 E, APER 4.2.6 E, APER 4.2.8 E, APER 4.2.10 E, APER 4.2.11 E or APER 4.2.13 E does not comply with Statement of Principle 2 (APER 2.1.2 P).
- 01/12/2001
APER 4.2.3
See Notes
Failing to inform:
of material information in circumstances where he was aware, or ought to have been aware, of such information, and of the fact that he should provide it, falls within APER 4.2.2 E.
- 01/10/2005
APER 4.2.4
See Notes
Behaviour of the type referred to in APER 4.2.3 E includes, but is not limited to:
- (1) failing to explain the risks of an investment to a customer;
- (2) failing to disclose to a customer details of the charges or surrender penalties of investment products;
- (3) mismarking trading positions;
- (4) providing inaccurate or inadequate information to a firm, its auditors or an actuary appointed by his firm under SUP 4 (Actuaries);
- (5) failing to disclose dealings where disclosure is required by the firm's personal account dealing rules.
- 01/10/2005
APER 4.2.5
See Notes
Recommending
an investment to a customer, or carrying out a discretionary transaction for a customer,
where he does not have reasonable grounds to believe that it is suitable for
that customer, falls within APER 4.2.2 E.
- 01/12/2001
APER 4.2.6
See Notes
Undertaking,
recommending or providing advice on transactions without
a reasonable understanding of the risk exposure of the transaction to
a customer falls within APER 4.2.2 E.
- 01/12/2001
APER 4.2.7
See Notes
Behaviour of the type referred to in APER 4.2.6 E includes, but is not limited to, recommending transactions in investments to a customer without
a reasonable understanding of the liability (either potential or actual) of
that transaction.
- 01/12/2001
APER 4.2.8
See Notes
Undertaking transactions without a reasonable understanding
of the risk exposure of the transaction to
the firm falls within APER 4.2.2 E.
- 01/12/2001
APER 4.2.9
See Notes
Behaviour of the type referred to in APER 4.2.8 E includes, but is not limited to, trading on the firm's own
account without a reasonable understanding of the liability (either potential
or actual) of the transaction.
- 01/12/2001
APER 4.2.10
See Notes
Failing
without good reason to disclose the existence of a conflict of interest in
connection with dealings with a client falls
within APER 4.2.2 E.
- 01/12/2001
APER 4.2.11
See Notes
Failing
to provide adequate control over a client's assets
falls within APER 4.2.2 E.
- 01/12/2001
APER 4.2.12
See Notes
Behaviour of the type referred to in APER 4.2.11 E includes, but is not limited to:
- 01/12/2001
APER 4.2.13
See Notes
Continuing to perform a controlled function despite having failed
to meet the standards of knowledge and skill set out in the Training and Competence
sourcebook (TC) for that controlled function falls within
APER 4.2.2 E.
- 01/12/2001
APER 4.3
Statement of Principle 3
- 01/12/2004
APER 4.3.1
See Notes
The Statement of Principle 3 (see APER 2.1.2 P) is in the following terms: "An approved person must observe proper standards of market conduct in carrying out his controlled function."
- 01/12/2001
APER 4.3.3
See Notes
A factor to be taken into account
in determining whether or not an approved person's conduct
complies with this Statement of Principle APER
2.1.2 P) is
whether he, or his firm, has
complied with the Code
of Market Conduct
MAR 1) or relevant market codes and exchange rules.
- 01/11/2007
APER 4.3.4
See Notes
Compliance with the code or rules described in APER 4.3.3 E will tend to show compliance with this Statement of Principle (APER 2.1.2 P).
- 01/12/2001
APER 4.4
Statement of Principle 4
- 01/12/2004
APER 4.4.1
See Notes
The Statement of Principle 4 (see APER 2.1.2 P) is in the following terms: "An approved person must deal with the FSA and with other regulators in an open and cooperative way and must disclose appropriately any information of which the FSA would reasonably expect notice."
- 01/12/2001
APER 4.4.2
See Notes
For the purpose of this Statement
of Principle (APER
2.1.2 P), regulators
in addition to the FSA are
those which have recognised jurisdiction in relation to regulated activities and a power to call
for information from the approved
person in connection with his controlled function or (in the case of an
individual performing a significant
influence function) in connection with the business for which
he is responsible. This may include an exchange or an overseas regulator.
- 01/12/2001
APER 4.4.3
See Notes
In
the opinion of the
FSA, conduct of the type described
in APER 4.4.4 E, APER 4.4.7 E, or APER 4.4.9 E does not comply with Statement of Principle 4 (APER
2.1.2 P).
- 01/12/2001
APER 4.4.4
See Notes
Failing
to report promptly in accordance with his firm's internal
procedures (or if none exist direct to the
FSA), information which it would be
reasonable to assume would be of material significance to the
FSA, whether in response to questions
or otherwise, falls within APER 4.4.3 E.
- 01/12/2001
APER 4.4.5
See Notes
There is no duty on an approved person to report such information directly to the FSA unless he is one of the approved persons responsible within the firm for reporting matters to the FSA. However, if an approved person takes steps to influence the decision so as not to report to the FSA or acts in a way that is intended to obstruct the reporting of the information to the FSA, then the FSA will, in respect of that information, view him as being one of those within the firm who has taken on responsibility for deciding whether to report that matter to the FSA.
- 01/12/2001
APER 4.4.6
See Notes
In determining whether or not an approved person's conduct under APER 4.4.4 E complies with Statement of Principle 4, the following are factors which, in the opinion of the FSA, are to be taken into account:
- (1) the likely significance to the FSA of the information which it was reasonable for the individual to assume;
- (2) whether the information related to the individual himself or to his firm;
- (3) whether any decision not to report the matter internally was taken after reasonable enquiry and analysis of the situation.
- 01/12/2001
APER 4.4.7
See Notes
Where the approved person is, or is one of the approved persons who is, responsible within the firm for reporting matters to the FSA, failing promptly to inform the FSA of information of which he is aware and which it would be reasonable to assume would be of material significance to the FSA, whether in response to questions or otherwise, falls within APER 4.4.3 E.
- 01/12/2001
APER 4.4.8
See Notes
In determining whether or not an approved person's conduct under APER 4.4.7 E complies with Statement of Principle 4 (APER 2.1.2 P), the following are factors which, in the opinion of the FSA, are to be taken into account:
- (1) the likely significance of the information to the FSA which it was reasonable for the approved person to assume;
- (2) whether any decision not to inform the FSA was taken after reasonable enquiry and analysis of the situation.
- 01/12/2001
APER 4.4.9
See Notes
Failing without good reason to:
- (1) inform a regulator of information of which the approved person was aware in response to questions from that regulator;
- (2) attend an interview or answer questions put by a regulator, despite a request or demand having been made;
- (3) supply a regulator with appropriate documents or information when requested or required to do so and within the time limits attaching to that request or requirement;
- 01/12/2001
APER 4.5
Statement of Principle 5
- 01/12/2004
APER 4.5.1
See Notes
The Statement of Principle 5 (see APER 2.1.2 P) is in the following terms: "An approved person performing a significant influence function must take reasonable steps to ensure that the business of the firm for which he is responsible in his controlled function is organised so that it can be controlled effectively."
- 01/12/2001
APER 4.5.2
See Notes
In
the opinion of the
FSA, conduct of the type described
in APER 4.5.3 E, APER 4.5.4 E, APER 4.5.6 E or APER 4.5.8 E does not comply with Statement of Principle 5 (APER
2.1.2 P).
- 01/12/2001
APER 4.5.3
See Notes
Failing
to take reasonable steps to apportion responsibilities for all areas of the
business under the approved person's control
falls within APER 4.5.2 E (see APER 4.5.11 G).
- 01/12/2001
APER 4.5.4
See Notes
Failing
to take reasonable steps to apportion responsibilities clearly amongst those
to whom responsibilities have been delegated falls within APER 4.5.2 E (see APER 4.5.11 G).
- 01/12/2001
APER 4.5.5
See Notes
Behaviour of the type referred to in APER 4.5.4 E includes, but is not limited to:
- (1) implementing confusing or uncertain reporting lines (see APER 4.5.12 G);
- (2) implementing confusing or uncertain authorisation levels (see APER 4.5.13 G);
- (3) implementing confusing or uncertain job descriptions and responsibilities (see APER 4.5.13 G).
- 01/12/2001
APER 4.5.6
See Notes
In the case of an approved person who is responsible under SYSC 2.1.3 R (1) for dealing with the apportionment of responsibilities under SYSC 2.1.1 R, failing to take reasonable care to maintain a clear and appropriate apportionment of significant responsibilities among the firm's directors and senior managers falls within APER 4.5.2 E.
- 01/12/2001
APER 4.5.7
See Notes
Behaviour of the type referred to in APER 4.5.6 E includes, but is not limited to:
- (1) failing to review regularly the significant responsibilities which the firm is required to apportion under APER 2.1.1 G;
- (2) failing to act where that review shows that those significant responsibilities have not been clearly apportioned.
- 01/12/2001
APER 4.5.8
See Notes
Failing
to take reasonable steps to ensure that suitable individuals are responsible
for those aspects of the business under the control of the individual performing
a significant influence function falls
within APER 4.5.2 E (see APER 4.5.14 G).
- 01/12/2001
APER 4.5.9
See Notes
Behaviour of the type referred to in APER 4.5.8 E includes, but is not limited to:
- (1) failing to review the competence, knowledge, skills and performance of staff to assess their suitability to fulfil their duties, despite evidence that their performance is unacceptable (see APER 4.5.14 G);
- (2) giving undue weight to financial performance when considering the suitability or continuing suitability of an individual for a particular role (see APER 4.5.14 G);
- (3) allowing managerial vacancies which put at risk compliance with the requirements and standards of the regulatory system to remain, without arranging suitable cover for the responsibilities (see APER 4.5.15 G).
- 01/12/2001
APER 4.5.10
See Notes
Strategy
and plans will often dictate the risk which the business is prepared to take
on and high level controls will dictate how the business is to be run. If
the strategy of the business is to enter high-risk areas, then the degree
of control and strength of monitoring reasonably required within the business
will be high. In organising the business for which he is responsible, the approved person performing a significant influence function should bear
this in mind.
- 01/12/2001
Apportionment of responsibilities
APER 4.5.11
See Notes
In order to comply with the obligations of Statement of Principle 5 (having regard to APER 4.5.3 E and APER 4.5.4 E), the approved person performing a significant influence function may find it helpful to review whether each area of the business for which he is responsible has been clearly assigned to a particular individual or individuals.
- 01/12/2001
Reporting lines
APER 4.5.12
See Notes
The
organisation of the business and the responsibilities of those within it should
be clearly defined (see APER
4.5.5 E (1)). Reporting lines should be clear to staff.
Where staff have dual reporting lines there is a greater need to ensure that
the responsibility and accountability of each individual line manager is clearly
set out and understood.
- 01/12/2001
Authorisation levels and job descriptions
APER 4.5.13
See Notes
Where
members of staff have particular levels of authorisation (see APER
4.5.5 E (2) and APER
4.5.5 E (3)), these should be
clearly set out and communicated to staff. It may be appropriate for each
member of staff to have a job description of which he is aware.
- 01/12/2001
Suitability of individuals
APER 4.5.14
See Notes
If an individual's performance is unsatisfactory, then the appropriate approved person (if any) performing a significant influence function should review carefully whether to allow that individual to continue in position. In particular, if he is aware of concerns relating to the compliance with requirements and standards of the regulatory system (or internal controls) of the individual concerned, or of staff reporting to that individual, the approved person performing a significant influence function should take care not to give undue weight to the financial performance of the individual or group concerned when considering whether any action should be taken. An adequate investigation of the concerns should be undertaken (including, where appropriate, adherence to internal controls). The approved person performing a significant influence function should satisfy himself, on reasonable grounds, that the investigation is appropriate, the results are accurate and that the concerns do not pose an unacceptable risk to compliance with the requirements and standards of the regulatory system (see in particular Statement of Principle 6 and APER 4.5.8 E and APER 4.5.9 E (1) and APER 4.5.9 E (2)).
- 01/12/2001
Temporary vacancies
APER 4.5.15
See Notes
In
organising the business, the approved person performing
a significant influence function should
pay attention to any temporary vacancies which exist (see APER
4.5.9 E (3)). He should take
reasonable steps to ensure that suitable cover for responsibilities is arranged.
This could include taking on temporary staff or external consultants. The approved person performing a significant influence function should assess
the risk that is posed to compliance with the requirements and standards of
the regulatory system as a result
of the vacancy, and the higher the risk the greater the steps he should take
to fill the vacancy. It may be appropriate to limit or suspend the activity
if appropriate cover for responsibilities cannot be arranged. To the extent
that those vacancies are in respect of one of the customer
functions, they may only be filled by persons approved
for that function.
- 01/12/2001
APER 4.6
Statement of Principle 6
- 01/12/2004
APER 4.6.1
See Notes
The Statement
of Principle 6 (see APER
2.1.2 P) is in the following
terms: "An approved person performing
a significant influence
function must exercise due skill, care and diligence in managing
the business of the firm for
which he is responsible in his controlled
function."
- 01/12/2001
APER 4.6.2
See Notes
In
the opinion of the
FSA, conduct of the type described
in APER 4.6.3 E, APER 4.6.5 E, APER 4.6.6 E or APER 4.6.8 E does not comply with Statement of Principle 6 (APER
2.1.2 P).
- 01/12/2001
APER 4.6.3
See Notes
Failing
to take reasonable steps to adequately inform himself about the affairs of
the business for which he is responsible falls within APER 4.6.2 E.
- 01/12/2001
APER 4.6.4
See Notes
Behaviour of the type referred to in APER 4.6.3 E includes, but is not limited to:
- (1) permitting transactions without a sufficient understanding of the risks involved;
- (2) permitting expansion of the business without reasonably assessing the potential risks of that expansion;
- (3) inadequately monitoring highly profitable transactions or business practices or unusual transactions or business practices;
- (4) accepting implausible or unsatisfactory explanations from subordinates without testing the veracity of those explanations;
- (5) failing to obtain independent, expert opinion where appropriate; (see APER 4.6.12 G).
- 01/12/2001
APER 4.6.5
See Notes
Delegating
the authority for dealing with an issue or a part of the business to an individual
or individuals (whether in-house or outside contractors) without reasonable
grounds for believing that the delegate had the necessary capacity, competence,
knowledge, seniority or skill to deal with the issue or to take authority
for dealing with part of the business, falls within APER 4.6.2 E (see APER 4.6.13 G).
- 01/12/2001
APER 4.6.6
See Notes
Failing
to take reasonable steps to maintain an appropriate level of understanding
about an issue or part of the business that he has delegated to an individual
or individuals (whether in-house or outside contractors) falls within APER 4.6.2 E (see APER 4.6.14 G).
- 01/12/2001
APER 4.6.7
See Notes
Behaviour of the type referred to in APER 4.6.6 E includes but is not limited to:
- (1) disregarding an issue or part of the business once it has been delegated;
- (2) failing to require adequate reports once the resolution of an issue or management of part of the business has been delegated;
- (3) accepting implausible or unsatisfactory explanations from delegates without testing their veracity.
- 01/12/2001
APER 4.6.8
See Notes
Failing
to supervise and monitor adequately the individual or individuals (whether
in-house or outside contractors) to whom responsibility for dealing with an
issue or authority for dealing with a part of the business has been delegated
falls within APER 4.6.2 E.
- 01/12/2001
APER 4.6.9
See Notes
Behaviour of the type referred to in APER 4.6.8 E includes, but is not limited to:
- (1) failing to take personal action where progress is unreasonably slow, or where implausible or unsatisfactory explanations are provided;
- (2) failing to review the performance of an outside contractor in connection with the delegated issue or business.
- 01/12/2001
APER 4.6.10
See Notes
In determining whether or not the conduct of an approved person performing a significant influence function under APER 4.6.5 E, APER 4.6.6 E and APER 4.6.8 E complies with Statement of Principle 6 (see APER 2.1.2 P), the following are factors which, in the opinion of the FSA, are to be taken into account:
- (1) the competence, knowledge or seniority of the delegate; and
- (2) the past performance and record of the delegate.
- 01/12/2001
APER 4.6.11
See Notes
An approved person performing a significant influence function will not
always manage the business on a day-to-day basis himself. The extent to which
he does so will depend on a number of factors, including the nature, scale
and complexity of the business and his position within it. The larger and
more complex the business, the greater the need for clear and effective delegation
and reporting lines. The
FSA
will look to the approved person performing a
significant
influence function
to take reasonable steps to ensure
that systems are in place which result in issues being addressed at the appropriate
level. When issues come to his attention, he should deal with them in an appropriate
way.
- 01/12/2001
Knowledge about the business
APER 4.6.12
See Notes
- (1) It is important for the approved person performing a significant influence function to understand the business for which he is responsible (APER 4.6.4 E). An approved person performing a significant influence function is unlikely to be an expert in all aspects of a complex financial services business. However, he should understand and inform himself about the business sufficiently to understand the risks of its trading, credit or other business activities.
- (2) It is important for an approved person performing a significant influence function to understand the risks of expanding the business into new areas and, before approving the expansion, he should investigate and satisfy himself, on reasonable grounds, about the risks, if any, to the business.
- (3) Where unusually profitable business is undertaken, or where the profits are particularly volatile or the business involves funding requirements on the firm beyond those reasonably anticipated, he should require explanations from those who report to him. Where those explanations are implausible or unsatisfactory, he should take steps to test the veracity of those explanations.
- (4) Where the approved person performing a significant influence function is not an expert in a business area, he should consider whether he or those with whom he works have the necessary expertise to provide him with an adequate explanation of issues within that business area. If not he should seek an independent opinion from elsewhere within or outside the firm.
- 01/12/2001
Delegation
APER 4.6.13
See Notes
- (1) An approved person performing a significant influence function may delegate the investigation, resolution or management of an issue or authority for dealing with a part of the business to individuals who report to him or to others.
- (2) The approved person performing a significant influence function should have reasonable grounds for believing that the delegate has the competence, knowledge, skill and time to deal with the issue. For instance, if the compliance department only has sufficient resources to deal with day-to-day issues, it would be unreasonable to delegate to it the resolution of a complex or unusual issue without ensuring it had sufficient capacity to deal with the matter adequately.
- (3) If an issue raises questions of law or interpretation, the approved person performing a significant influence function may need to take legal advice. If appropriate legal expertise is not available in-house, he may need to consider appointing an appropriate external adviser.
- (4) The FSA recognises that the approved person performing a significant influence function will have to exercise his own judgment in deciding how issues are dealt with, and that in some cases that judgment will, with the benefit of hindsight, be shown to have been wrong. He will not be in breach of Statement of Principle 6 unless he fails to exercise due and reasonable consideration before he delegates the resolution of an issue or authority for dealing with a part of the business and fails to reach a reasonable conclusion. If he is in doubt about how to deal with an issue or the seriousness of a particular compliance problem, then, although he cannot delegate to the FSA the responsibility for dealing with the problem or issue, he can speak to the FSA to discuss his approach (see APER 4.6.5 E).
- 01/12/2001
Continuing responsibilities where an issue has been delegated
APER 4.6.14
See Notes
Although
an approved person performing
a significant influence function may
delegate the resolution of an issue, or authority for dealing with a part
of the business, he cannot delegate responsibility for it. It is his responsibility
to ensure that he receives reports on progress and questions those reports
where appropriate. For instance, if progress appears to be slow or if the
issue is not being resolved satisfactorily, then the approved
person performing a significant
influence function may need to challenge the explanations he
receives and take action himself to resolve the problem. This may include
increasing the resource applied to it, reassigning the resolution internally
or obtaining external advice or assistance. Where an issue raises significant
concerns, an approved person performing
a significant influence function should
act clearly and decisively. If appropriate, this may be by suspending members
of staff or relieving them of all or part of their responsibilities (see APER 4.6.6 E).
- 01/12/2001
APER 4.7
Statement of Principle 7
- 01/12/2004
APER 4.7.1
See Notes
The Statement
of Principle 7 (see APER
2.1.2 P) is in the following
terms: "An approved person performing
a significant influence
function must take reasonable steps to ensure that the business
of the firm for
which he is responsible in his controlled
function complies with the relevant requirements and standards
of the regulatory system."
- 01/12/2001
APER 4.7.2
See Notes
In the opinion of the FSA, conduct of the type described in APER 4.7.3 E, APER 4.7.4 E, APER 4.7.5 E, APER 4.7.7 E, APER 4.7.9 E or APER 4.7.10 E does not comply with Statement of Principle 7 (APER 2.1.2 P).
- 01/12/2001
APER 4.7.3
See Notes
Failing to take reasonable steps to implement (either personally or through a compliance department or other departments) adequate and appropriate systems of control to comply with the relevant requirements and standards of the regulatory system in respect of its regulated activities falls within APER 4.7.2 E. In the case of an approved person who is responsible, under SYSC 2.1.3 R (2), with overseeing the firm's obligation under SYSC 3.1.1 R, failing to take reasonable care to oversee the establishment and maintenance of appropriate systems and controls falls within APER 4.7.2 E.
- 01/12/2001
APER 4.7.4
See Notes
Failing
to take reasonable steps to monitor (either personally or through a compliance
department or other departments) compliance with the relevant requirements
and standards of the regulatory system in
respect of its regulated activities falls within APER 4.7.2 E (see APER 4.7.12 G).
- 01/12/2001
APER 4.7.5
See Notes
Failing
to take reasonable steps adequately to inform himself about the reason why
significant breaches (whether suspected or actual) of the relevant requirements
and standards of the regulatory system in
respect of its regulated activities may have arisen (taking account
of the systems and procedures in place) falls within APER 4.7.2 E.
- 01/12/2001
APER 4.7.6
See Notes
Behaviour
of the type referred to in APER 4.7.5 E includes, but is not limited to, failing to
investigate what systems or procedures may have failed including, where appropriate,
failing to obtain expert opinion on the adequacy of the systems and procedures.
- 01/12/2001
APER 4.7.7
See Notes
Failing
to take reasonable steps to ensure that procedures and systems of control
are reviewed and, if appropriate, improved, following the identification of
significant breaches (whether suspected or actual) of the relevant requirements
and standards of the regulatory system relating
to its regulated activities, falls within APER 4.7.2 E (see APER 4.7.13 G).
- 01/12/2001
APER 4.7.8
See Notes
Behaviour of the type referred to in APER 4.7.7 E includes, but is not limited to:
- (1) unreasonably failing to implement recommendations for improvements in systems and procedures;
- (2) unreasonably failing to implement recommendations for improvements to systems and procedures in a timely manner.
- 01/12/2001
APER 4.7.9
See Notes
In the case of the money laundering reporting officer, failing
to discharge the responsibilities imposed on him by the firm in accordance with
SYSC 3.2.6I R
falls within
APER 4.7.2 E.
- 31/08/2006
APER 4.7.10
See Notes
In the case of an approved person performing a significant influence function responsible
for compliance under SYSC
3.2.8 R, failing to take reasonable steps to ensure that appropriate
compliance systems and procedures are in place falls within
APER 4.7.2 E (see
APER 4.7.14 G).
- 01/12/2001
APER 4.7.11
See Notes
The
FSA
expects an approved
person performing a significant
influence function to take reasonable steps both to ensure his firm's compliance with the relevant requirements
and standards of the regulatory system and
to ensure that all staff are aware of the need for compliance.
- 01/12/2001
Systems of control
APER 4.7.12
See Notes
An approved person performing a significant influence function need not
himself put in place the systems of control in his business (APER 4.7.4 E).
Whether he does this depends on his role and responsibilities. He should,
however, take reasonable steps to ensure that the business for which he is
responsible has operating procedures and systems which include well-defined
steps for complying with the detail of relevant requirements and standards
of the regulatory system and
for ensuring that the business is run prudently. The nature and extent of
the systems of control that are required will depend upon the relevant requirements
and standards of the regulatory system,
and the nature, scale and complexity of the business (see APER 3.3.2).
- 01/12/2001
Possible breaches of regulatory requirements
APER 4.7.13
See Notes
Where
the approved person performing
a significant influence function becomes
aware of actual or suspected problems that involve possible breaches of relevant
requirements and standards of the regulatory
system falling within his area of responsibility, then he should
take reasonable steps to ensure that they are dealt with in a timely and appropriate
manner (APER 4.7.7 E). This may involve an adequate investigation to find out what systems
or procedures may have failed and why. He may need to obtain expert opinion
on the adequacy and efficacy of the systems and procedures.
- 01/12/2001
Review and improvement of systems and procedures
APER 4.7.14
See Notes
Where
independent reviews of systems and procedures have been undertaken and result
in recommendations for improvement, the approved
person performing a significant
influence function should ensure that, unless there are good
reasons not to, any reasonable recommendations are implemented in a timely
manner (APER 4.7.10 E). What is reasonable will depend on the nature of the inadequacy
and the cost of the improvement. It will be reasonable for the approved person performing a significant influence function to carry
out a cost benefit analysis when assessing whether the recommendations are
reasonable.
- 01/12/2001